The
low price tag put on Nigerian cassava chips by China is frustrating Nigerian
exporters of the commodity. This development is impeding the successful
execution of the cassava chip export contract entered by Nigeria and China.
Chinese
importers, it was learnt, are offering Nigerian exporters $250 per tonne
instead of $400 it goes for in Europe and $350 in Israel. Business advisory
services officials at the Bank of Agriculture have advised Nigerian cassava
chips exporters that if the contract price is less than $400 per tonne, the
business will not be viable.
Financial
Vanguard gathered that the Bank of Agriculture team suggested that exporters
should explore European markets that offer $400 or Israel that offers $350 as
against China’s $250 offering.
The
contract for the export of cassava was negotiated
by the Obasanjo regime in his
cassava initiative and is being undermined by the Chinese.
This
aside, indications are also that the desire of the Federal Government to
develop a viable value chain in the agricultural sector is being hampered by
the current regime of interest rate of 22 per cent among other factors.
Operators
in the cassava end of the value chain, especially cassava chips processors are
labouring in pain as a result of high interest rate and the farm gate price of
raw cassava tubers.
They
also said that high cost of internal logistics (transportation), high cost of
shipping, hurdles in documentations with Customs, finance needed for
capacity-building, are among the numerous challenges facing value added
production in the country.
According
to submissions by various stakeholders at meetings with government
functionaries, bankers and export financing agencies, which Financial Vanguard
sighted, the challenges of cassava chip processors and the cassava industry are
that in Nigeria, most cassava peasant farmers do not make profit and in actual
fact, are suffering.
Processors
said that the Bank of Agriculture (BOA) does not pay attention to them and it
has been difficult for them to access credit facilities and that the bank’s
claims of financing 8,000 cassava farmers’during last year’s planting season
was a gimmick.
According
to their submission to government, for the average cassava farmer, it costs
N200,000 per hectare from clearing to harvesting of cassava. Nigerian peasant
farmers currently plant cassava varieties that yield 12 tonnes to 15 tonnes per
hectare saying that in their calculation, they operate at a loss.
Their
submission at the stakeholders’ meeting also pointed out that agriculture in
Nigeria currently employs 70 per cent of the nation’s population and
contributes only 0.5 per cent to non-oil export. This, they argued, is what is
playing out in the level of poverty in the country.
They
said that earnings of Nigerian farmers as compared to other nations with less
employment in agriculture and high export contributions or earnings like South
Africa, are very low.
Their
situation, they said, is further worsened by the activities of middlemen,
cassava merchants, who buy from the farmers at a cheap rate and sell to
processors at a high rate pinning the cost differential on high transportation
cost from the farms to the factories.
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They
said that last year, a pick-up truck load of cassava tubers from different
locations in Nigeria, which does not meet the correct measurement of 2.5
tonnes, was going from N50,000 to N65,000 depending on location.
According
to them, the international commodity market price of cassava chips is fixed.
Nigeria has other competitors in cassava products such as Thailand, Vietnam,
Brazil etc. To be cost effective, they said that processors want to buy raw
cassava tubers for N8,000 per ton knowing full well that the international
market price for cassava chips is fixed.
They
said that when processors are processing, they work with the ratio of four tons
of raw tubers to produce one ton of cassava chips with diameter 3mm to 5mm
(peeled).
They
claimed that the cost of transportation of a 30 tonnes truck from Lagos to
Sokoto is about N300, 000; this is further compounded by the high shipping cost
in Nigeria as compared to the rest of the world.
Also
cited as hampering the bid to increase non-oil export through cassava chips
export is the bottle necks in Customs, bribery, and fumigation.
They
claimed that government officials make exporters to buy materials that will be
used for fumigating the containers and the documentation hurdles that follow.
Counting
their woes, they said that lack of adequate finance to build capacity is also
hampering cassava chip production in Nigeria.
As a
result of lack of financing, producers are not able to meet production targets,
buy more machineries and mop up dry cassava chips around Nigeria i.e. states
like Taraba, Nassarawa, Benue, Kogi and Sokoto.
Some
cassava peasant farmers allow their cassava crops to stay over two years and
above as a result of no buyers, no access roads to their farms to evacuate the
products and the tubers rot away.
Some
dry their cassava in certain areas i.e. Akwanga, Nassawara State and use as fire
wood as a result of lack of buyers.
These,
they said, are some of the challenges faced by cassava chips processors and
exporters and the main reason why Nigeria, after signing a contract with China
to export 3.2 million metric tonnes of cassava chips annually, is yet to
execute the contract.
A
cassava chips processor said that the offering price of the Chinese with which
the Federal Government signed a contract for cassava chip export is a big
issue, when compared with the Nigerian cassava raw tuber price processing and
exporting. BOA at the stakeholders’ consultation forum informed that if the
contract price is less than $400 per ton, the business will not be viable.
The
team suggested that the exporter explore European markets that offer $400 or
Israel that offers $350 as against China’s $250.
They
said that they were taken aback by the mere fact that the credit line open for
them by Afrinexim bank has not been disbursed.
Explaining
the rationale for approaching Afrinexim for credit facility, officials of the
Ministry of Agriculture said: “The main reason of going to Afrinexim for the
loan facility by the ministry is as a result of the high cost of lending by
Nigerian banks, 22 per cent per annum, how do processors and exporters survive?
However,
two options were opened to the processors and exporters – either to access the
$40 million loan directly with the Afrinexim Bank or go through the Bank of
Industry and BOA
Only
Thai Farms International Limited at the meeting opted to deal with Afrinexim
Bank Egypt directly.
The
representative of Flour Mills Nigeria left the meeting on sighting BOA and Bank
of Industry representatives, complaining that they are slothful in their dealing
and commercial banks are better off.
Other
processors, exporters present at the meeting said that the Bank of Agriculture
had already taken their applications.
The
ministry promised to look into the request that the use of railway lines to
convey products from locations to the ports will be cheaper and promised to
liaise with the Federal Ministry of Transport to work it out.
They
were also promised that government will look into shipping cost, bottlenecks of
other agencies i.e. Customs, inspection, quarantine; their ministry will liaise
with the agencies involved.
Financial
Vanguard learnt that a private meeting session was held between the banks (BOI,
BOA), some ministry officials and Afrinexim representative, the Federal
Ministry of Agriculture officials, Afrinexim Egypt representative, likewise the
processors and exporters.
The
exporters at the meeting include Thai Farms, Sajaab Farms, Flo Mulvina Nig.
The
exporters’ presentations were on their success in dry chips export to countries
like Israel and China. Basically, their presentations were skewed towards the
numerous challenges they faced in the course of exportation.
The
summary of their challenges include: Fluctuating prices of cassava tubers;
competition with garri producers, overarching bureaucracy at the ports; low
demand price for chips in the booming Asian countries; need for support in
increasing their own production channels; and logistics problems.
Mrs.
Ada Osakwe and Chief Awoniyi briefed the meeting on their trip to Egypt to
secure $40 million loan and what was discussed and agreed.
Processors
who had put in their applications were said to have made the following request
to have their own farms apart from outgrowers attached to them, trucks, more
machineries, advance drying techniques among others.
A
time frame, it was learnt, was picked and processors and exporters were made to
know that the BOA 8will put in their own charges. Since cassava chips has the
dry season as its season in the world for mass production, the BOA agreed to
submit the loan request to Afrinexim on time and once given the green light,
will release money to processors, exporters.
Bank
of Agriculture also promised that by April this year, they would have attended
to all who put in their applications.
According
to the processors, up till now, nothing has happened, their books has not been
okayed by Afrinexim Bank Egypt.
The
cassava processors alleged that officials in the Federal Ministry of
Agriculture and Rural Development overseeing the BOA are not doing anything
about it and processors/exporters are left to their fate.
They
said that it was also agreed that once these frontline processors/ exporters
are given the money applied for and they are judiciously utilised and repaid,
others will come on board.
But
this is yet to happen as the books of BOA are not properly kept and it is
affecting processors/exporters denying them from accessing the loan, since they
are passing through the BOA.
The
cassava bread intervention, they claim, has suffered the same fate.
While
revealing Afrinexim partnership profile with Nigeria, Mr. Adomakoh listed
successful projects like the Indorama fertilizer plant and Notore’s cocoa
processing plants and advised that to succeed in these projects, there must not
be an overarching government influence on the cocoa and starch exports of the
past.
Vanguard
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